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The ACA's Impact on COBRA Notice Requirements

The Inside Perspective
(June 20, 2014)

The Affordable Care Act (the "ACA") shook up American health care law on March 23, 2010. Its slow but continuing rollout creates new issues each year.

For 2014, now that the open enrollment period for the year has ended, government agencies have focused their attention on the ACA's interaction with other laws, specifically the Consolidated Omnibus Budget Reconciliation Act ("COBRA").

TIP: Employers should update their current COBRA notices or switch to the new model notices in order to ensure COBRA compliance.

For nearly 30 years, COBRA has provided employees the chance to continue their health insurance once their employment ends and they would otherwise lose coverage. Now that the ACA has been implemented, it too provides a health care coverage option for those individuals. In fact, coverage through the ACA may even be a better choice for departing employees due to certain tax credits and cost-sharing reductions

The Department of Labor (the "DOL") has issued new model COBRA notices that require the inclusion of information about the ACA and its Health Insurance Marketplace.

Going forward, COBRA notices must inform employees:

  • that they may be able to get coverage through the Health Insurance Marketplace,
  • what the Health Insurance Marketplace is,
  • how to enroll in Marketplace coverage,
  • how the two coverage options interact, and
  • what to consider when choosing between coverage options.

The DOL's new model notices cover both the initial COBRA notice that is due at the start of employer coverage and the COBRA election notice that is due when a qualifying event occurs. The use of these model notices is considered good faith compliance with COBRA notice requirements.

*Jennifer Nusbaum is a Summer Associate at Smith Moore Leatherwood LLP and is a rising third-year student at UNC School of Law.

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